Spring into Spring With Smarter Real Estate Investment Strategies
Hunting for the Perfect Investment Strategy:
Why Real Estate Fits the Bill
April is here! That means a few key things: one, sunnier evenings. Who doesn’t like to finish a long day in the office, only to look outside and see there’s still a bit of sunlight left to enjoy? Two, tax season looms closer.
Then, of course, there’s Easter for those who celebrate it. Even so, hunting for colorful Easter eggs on a rainy spring day may be a distant childhood memory. Now, as an ambitious investor, you are on a different hunt, and it’s not for something that you can fit neatly in a flimsy little basket: an investment opportunity that is both rewarding and relatively interesting.
This month, to keep with the spirit of tax season, I want to share major tax benefits of investing in real estate:
Real Estate Tax Benefit in the US
To start, many investors worry that real estate will require too great a commitment: both in terms of time and money. Plus, it’s not just the thought of pouring time and money into property that is intimidating; it’s also the belief that you’ll have to care for it and maintain it, as if it were a living, breathing thing.
The good news is that investors who own rental properties can enjoy many different tax deductions, many of which apply to the most challenging aspects of real estate: think property tax, market fluctuations and–yes–even basic wear and tear. In other words, if you learn that you have to repaint more than one-third of your units to ensure that the walls practically sparkle, you can account for that come tax time.
Additionally, the 1030 Exchange makes it easier than ever to maximize your real estate strategy. When you take advantage of it, you can temporarily forgo taxes on a sold property and instead pour your gains into a different property. Essentially, you are performing a trade of sorts, either for a property that is equally valuable or one that is even more valuable. This can allow you to get a feel for different markets without risking too much just to test the waters.
Real Estate Tax Benefits in Canada
Canadian real estate investors can also benefit from generous tax deductions. In fact, the Government of Canada has outlined an extensive list of deductible expenses. Some examples of deductible expenses include repairs and maintenance, property taxes, insurance, management and administration fees, utilities, travel expenses, and advertising.
Expenses fall into two different categories: capital expenses and current expenses. Capital expenses may enhance a property and increase its value long-term. For example, if you completely renovate the exterior of a property in an attempt to modernize it, that would be a capital expense. A current expense, on the other hand, may be needed very frequently. Such expenses tend to be necessary to maintain basic quality standards but don’t generally boost a property’s overall value.
Additionally, Canadian real estate investors may take advantage of Capital Cost Allowance, or CCA. CCA covers any assets that depreciate in value over time. You will not be able to take complete advantage of CCA upfront and instead will see these numbers reflected on your tax returns over the course of several years.
Sure, nobody really “looks forward to” tax time. There are so many documents to look over. If you stare at them for too long, all the words and numbers seem to merge into one confusing mess. But when you take into account what you stand to gain as a real estate investor, tax time may soon feel less like an inevitable inconvenience and more like an advantageous chore.
Happy spring and tax season!
We wish you all good health and happiness.
The phrase “instant equity” should refer to the difference between what your home is worth at the time of closing and your mortgage balances — i.e., what you owe on it. For most buyers, that would mean their instant equity was the amount they had put down on the home.
Equity is the difference between what you owe on your mortgage and what your home is currently worth. If you owe $150,000 on your mortgage loan and your home is worth $200,000, you have $50,000 of equity in your home.
Your equity can increase in two ways. As you pay down your mortgage, the amount of equity in your home will rise. Your equity will also increase if the value of your home jumps.
About Lea and Lefry:
Lea and Lefry Amarille are real estate investors. They have been actively involved in the GTA and Durham Region real estate investing for a number of years. Their mission is to provide great quality homes for tenants, while at the same time providing an above-average return on investment (R.O.I) for their investor partners and themselves. It is truly a win-win-win way of investing!
Lea and Lefry offer their investor partners hands-free investment opportunities. If you are interested to learn how to earn an above-average return on your investment, backed by a solid asset, and without a hassle of being a landlord, please contact Lea and Lefry.
For more information about Lea and Lefry and their investment program,
please call (416) 827-0586. or visit https://investorleaandlef.com/